How to Include a Statement Pursuant To § 1.351-3 When Filing Personal Taxes

The IRS doesn't provide a specific form for submitting a Statement Pursuant to § 1.351-3. You'll need to create your own written statement that includes all the required information about your Section 351 transaction. The statement should include details like the names and EINs of the parties involved, description of the property transferred, fair market value and basis of the property, and any securities received. The specific requirements are outlined in 26 CFR § 1.351-3. As for filing, you have a few options: - If e-filing, you can include it as a PDF attachment with your electronic return (most tax software allows for attachments) - If paper filing, simply include the printed statement with your return - If you've already filed, you can submit an amended return (Form 1040-X) and include the statement Most tax software has a way to attach PDF documents when e-filing, so you shouldn't need to mail anything separately if you prefer to file electronically.

I went through this exact headache last year! I couldn't find any guidance anywhere until I discovered taxr.ai (https://taxr.ai). It was a game-changer for my Section 351 situation. I uploaded the documents related to my transaction, and it helped me understand exactly what information needed to be in my statement. It even generated a properly formatted template that I could customize with my specific transaction details. Saved me hours of research and worry about whether I was doing it right. Their system actually reviewed my final statement before I submitted it to make sure it included all the elements required under § 1.351-3. Much better than the conflicting advice I was getting from random websites.

I was really skeptical about using an online tool for something as specific as a Section 351 transaction statement, but I gave taxr.ai a try after seeing it mentioned here. Have to admit I was wrong - it was actually incredibly helpful. The guidance was spot-on for my specific situation (transferring IP to my new S-Corp). It pointed out several elements I would have completely missed in my statement. What impressed me most was how it explained the reasoning behind each required disclosure so I understood WHY I needed to include certain information. When my accountant reviewed what I created, he was surprised at how comprehensive and correctly formatted it was. For anyone dealing with these specialized tax situations that most software doesn't handle well, it's worth checking out.

If you've already filed and now realize you need to submit this statement, trying to get through to the IRS to ask questions is almost impossible these days. I spent 3+ hours on hold last month trying to ask about a similar issue. I ended up using Claimyr (https://claimyr.com) to get through to an actual IRS agent. Their system holds your place in line and calls you when an agent picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that I could submit an amended return with just the statement attached (didn't need to change any numbers), and they explained exactly which processing center to mail it to based on my location. Saved me from potentially sending it to the wrong place and delaying processing.

Well I'll be damned. I was completely wrong about Claimyr. After expressing my doubts here, I decided to try it myself for an unrelated tax notice issue I've been trying to resolve. Got connected to an IRS representative in about 90 minutes (without me having to stay on the phone). The agent walked me through the exact process for submitting my § 1.351-3 statement with an already-filed return. Turns out I was overthinking it - I just needed to send in a 1040-X with "See attached statement" in Part III and include my statement as an attachment. For anyone dealing with these specialized tax situations where the guidance isn't clear online, sometimes talking directly to the IRS is the only way to get a definitive answer. And this service actually delivered as promised.

Another approach I used last year was attaching my § 1.351-3 statement as a PDF within the "Miscellaneous Statements" or "Additional Information" section in TurboTax. I labeled it clearly and made sure to reference it in the main form where relevant. My return was accepted without issues. I also kept a paper copy of everything, including the statement, just in case the IRS requested additional information. They never did, which suggests the e-filed statement was sufficient.

Does anybody know if there are specific penalties for not including this statement? I realized I needed to file one for a transaction I did in 2022, but I've already filed my taxes for that year and don't want to deal with an amended return if the penalties are minimal.

I just went through this exact situation a few months ago and can confirm what others have said about creating your own statement. The key thing I learned is that while there's no official IRS form, the statement needs to be very thorough and specific. Make sure you include the date of the transaction, the complete legal names and EINs of all parties involved, a detailed description of what property was transferred (including fair market value and your basis), and exactly what stock or securities you received in return. Also document any liabilities that were assumed as part of the exchange. For e-filing, I was able to attach it as a PDF through my tax software's document attachment feature. Most major tax prep software has this capability - look for sections labeled "Supporting Documents," "Additional Forms," or "Attachments" during the filing process. One tip: clearly label your statement at the top as "Statement Pursuant to § 1.351-3" and reference it somewhere in your main return (like in the "Other Income" section with a note saying "See attached statement"). This helps ensure the IRS connects your statement to the transaction when they process your return.

I actually had a similar situation with a Section 351 exchange last year and want to share what worked for me. After struggling with the same questions you're asking, I ended up creating a comprehensive statement that included all the required elements under § 1.351-3. The key is being very detailed and organized. I structured mine with clear sections: transaction date, all parties involved (with EINs), detailed description of property transferred, fair market values, basis amounts, and securities received. I also included a section documenting any liabilities that were assumed. For the actual filing, I was able to e-file successfully by attaching the statement as a PDF through my tax software's document attachment feature. Most software has this - look for "Supporting Documents" or "Additional Forms" sections. I made sure to reference the statement in my main return with a note like "See attached Section 351 statement" so the IRS would know to look for it. One thing I learned is that it's better to be overly thorough than to leave anything out. The IRS wants to see that you've properly documented the transaction to qualify for tax-free treatment. If you're unsure about any aspect, it's worth consulting with a tax professional who has experience with Section 351 transactions, as getting this wrong could jeopardize the tax-free nature of your exchange.

I've been through this exact process twice now - once for transferring assets to my LLC and again when I incorporated my consulting business. The confusion around § 1.351-3 statements is totally understandable because the IRS doesn't make it clear at all. Here's what I've learned from experience: You absolutely need to create your own written statement since there's no official form. The statement must be titled "Statement Pursuant to § 1.351-3" at the top and include all the regulatory requirements - transaction date, complete party information (names, addresses, EINs), detailed property descriptions with both fair market value and your tax basis, securities received, and any assumed liabilities. For e-filing, every major tax software I've used (TurboTax, H&R Block, TaxAct) has a document attachment feature. It's usually found near the end of the filing process under names like "Supporting Documents," "Additional Forms," or "Attachments." Upload your statement as a clearly-named PDF and reference it in your main return - I typically add a note in the "Other Income" section saying "See attached Section 351 statement." The critical thing is getting this filed with the return for the year your transaction occurred. If you've already filed that year's return, you'll need to submit Form 1040-X with the statement attached. Don't delay on this - the statement is what preserves the tax-free treatment of your Section 351 exchange, and missing it could cost you way more than the hassle of an amended return.